Frequently Asked Questions

There’s a lot at work in a Betterment account. Get the answers to the top questions new customers ask us.

Getting to know Betterment

What is Betterment, exactly? How does it work?

Betterment is an online financial advisor. We help you plan your financial goals and recommend smart investment choices, so that you save time and gain peace of mind, knowing that your money is working for you. We’re a fiduciary, which means we put your interests first.

When you open a Betterment account, we advise you on what your portfolio should include, while giving you control over how much risk you take on. All of our portfolio strategies are globally diversified and built using index-tracking exchange-traded funds (ETFs). We pick the funds for you, making recommendations that control costs and taxes. We also automatically take care of things like portfolio rebalancing, reinvesting dividends, and tax loss harvesting.

When you make a deposit, we invest all of your money automatically, trading fractional shares for you in the background. That means there’s no extra step to turn your cash into investments, and your returns aren’t dragged down by holding extra cash.

What are Betterment's fees?

Betterment’s online financial advice is available for 0.25% per year with no minimum balance. We call this our Digital plan because you receive our advice online, through email, and through your mobile app. For 0.40% per year, you can also gain over-the-phone access to our team of CFP® professionals and licensed financial experts who can provide in-depth advice on investments outside of Betterment. This Premium plan requires a minimum balance of $100,000. Learn more about our pricing

For balances in excess of $2 million (excluding 401(k) balances through Betterment for Business), the Digital plan charges 0.15% per year and the Premium plan charges 0.30% on the portion of your balance above $2 million. Balances are calculated based on household. If you qualify for part of your balance managed free and have a balance above $2 million, the dollars managed free will be those with the higher fee.

For either plan, we calculate your fee daily so we can accurately account for deposits, withdrawals and market fluctuations that occur. We then total the fees from those daily calculations each quarter, billing you a fraction of the total annual fee. This means that if you withdraw your balance before the end of the quarter, you’re only charged the fee for the days your money was managed by Betterment.

What does the fee get you? It covers the advice you receive, the transactions, trades, transfers, and rebalancing we manage for you, and all other account administration. We do not charge you additional transaction fees to buy and sell securities.

Any fund held in your portfolio at Betterment will assess fund-level fees, called expense ratios, but Betterment aims to keep these costs low, and we receive no part of these fees.

How does Betterment compare to other robo-advisors?

Like Betterment, most robo-advisors use technology to recommend a portfolio and automate the investment process. Betterment doesn't stop there. We’re designed to help you identify your financial goals, choose a portfolio for each of your goals, automate your savings, and keep your taxes and fees low. Then, when you have questions, licensed experts from our Support and Advice teams are ready over the phone, or to refer you to a one-on-one financial advisor.

In other words, Betterment aims to help you answer, “How can I be a smarter, better investor across my finances?” while other robo-advisors only answer “What should my portfolio look like?”

Betterment offers advice as a fiduciary, and we help you manage your money. We do this work as two legal entities—Betterment, LLC, which is an SEC-registered investment advisor, and Betterment Securities, an SEC-registered broker-dealer, regulated by FINRA. Your money is protected through Betterment Securities’ membership in SIPC, insuring investors up to $500,000 (including $250,000 in claims for cash). Note that SIPC insurance does not protect against market changes in your account. Learn more in SIPC’s explanatory brochure.

Getting Started

What investments does Betterment offer?

For each of your financial goals, Betterment recommends a specific stock-to-bond allocation of our recommended portfolio strategy. This portfolio strategy is designed to reflect the total world market to help maximize expected returns while minimizing risk. Alternatively, you can also select from three other portfolio strategies that might match your investing views:

Betterment SRI, our socially responsible portfolio strategy

Goldman Sachs Smart Beta, a factor-based portfolio strategy

BlackRock Target Income portfolios, five different bond portfolios targeting cash income

If you roll over 401(k) or IRA assets to Betterment, your previous provider will typically sell the investments with no tax consequence and transfer the cash value to Betterment. If you wish to transfer investments from a personal brokerage account, you may be eligible for an ACATS transfer, which moves your holdings to Betterment without selling them first.

In addition to transfers, any customer can link their bank account to Betterment to make cash deposits, including regular automatic deposits. To help prevent fraud, Betterment customers can link only one bank account at a time for deposits. You can sync as many bank accounts as you wish to simply see all your assets in one place.

What type of accounts does Betterment offer?

Betterment helps you pursue many different financial goals. One way we do this is by offering different account types that align with your goals. The baseline account type is a personal taxable account. We also offer joint accounts for partners and spouses. For your retirement savings, you can open IRAs, including traditional IRAs, Roth IRAs, or SEP IRAs. To help you make plans for your beneficiaries, we also support trust accounts.

You can open any of these account types once you sign up. You can also align each of your accounts to a different investment goal.

Investments: Not FDIC Insured • No Bank Guarantee • May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment's charges and expenses. Betterment's internet-based services are designed to assist clients in achieving discrete financial goals. They are not intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation and do not incorporate specific investments that clients hold elsewhere. For more details, see our Form ADV Part 2 and other disclosures. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdictions where Betterment is not registered. Market Data by Xignite.